TaxTMI 
TaxTMI 
2016 (7) TMI 572
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....8 and 2008- 09 respectively. 3. Brief facts of the case are that the assessee is a partnership firm constituted with five partners. It has filed its return of income on 20.10.2007 and 30.9.2008 for the Asstt.Years 2007-08 and 2008-09 respectively. It has declared NIL income in both the assessment years after claiming deduction of Rs. 2,06,02,468/- and Rs. 1,29,16,846/- under section 80JJA of the Income Tax Act for the respective assessment years. The cases of the assessee were selected for scrutiny assessment in both the years and notices under section 143(2) were issued on 17.7.2008 and 25.9.2009 in these assessment years respectively. On scrutiny of the accounts, it revealed to the AO that the assessee has claimed deduction under section 80JJA on the ground that it has manufactured bio-fertilizers, which was sold by it in both the years. The ld.AO has observed that the assessee has purchased cow-dung from 10 parties in the Asstt.Year 2007-08 totaling to Rs. 25,77,500/-. It has made unexplained sale of fertilizers to 9 parties having value of Rs. 59,95,492/-. Similarly, in the Asstt.Year 2008-09 also he made reference to higher rate of GP and how the purchases could not be subs....
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....eld due to following reasons: (i) The A. O. in para 3.6 (C) has observed that: "In view of the above discussion which shows that there are many discrepancies and defects in the books of accounts of the assessee which lead to the invoking of the provisions u/sec. 145(3) of the Income-tax Act. On the perusal of the details submitted and contra confirmations received which lead to the conclusion that the books of accounts prepared by the assessee are defective and therefore, books results shown therein cannot be trusted and hence same are rejected u/sec. 145(3) of the Income-tax Act." The above remarks are very general in nature and the A. O. has really failed to point out any serious discrepancy or defect in the books of accounts of the assessee which would necessitate the rejection of the books of accounts and the book results. The fact that out of the ten parties from whom the assessee purchased cow dung during the year, two parties could not be located during the course of assessment proceedings or that such two parties did not reconfirm the selling of cow dung to the assessee would not justify the rejection of book results. The cow dung is essentially p....
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.... of the Act appears to be totally misconceived. In the said letter itself it is clearly stated that the product manufactured by the assessee can be approved as organic inputs for use in organic farming. Again while the A. 0. has rejected the claim for deduction u/sec. 80JJA of the Act, he has accepted the business profits shown by the assessee to be correct without pointing out as to if the assessee has not carried on the business of manufacture and sale of organic manure, then from which other business the assessee has earned the business incomes which are shown by the assesee and accepted by him to be correct. The assessee produced purchase vouchers, delivery challans for cow dung purchased, the sales bills, transport receipts and the delivery challans showing that the sale and delivery of vermin compost which is an organic manure was made by the assessee throughout the year. The A. O. has not brought out any evidence to prove that such purchase vouchers, delivery challans, sales bills, transport receipts, delivery challans, etc. for vermin compost sold and delivered are fictitious and not acceptable as evidences, In fact, the assessee also sold the vermin compost to the....
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....ime intention of legislature for the claim of deduction u/s. 80JJA of the I.T. Act. During the assessment proceedings, a notice u/s. 133(6) of the I.T.Act has been issued on SGS India Pvt. Ltd., Mumbai. The SGS India Pvt. Ltd. is a company which issues certificates to the manufacturers of organic fertilizers. On going through the details received from SGS India Pvt. Ltd, it is seen that the certificate was issued to assessee for the process compost production and this certificate is nothing but the annexure-I which assessee stated that same not provided. The validity period of this was from 04.03.2006 to 03.03.2007. It was further mentioned in this certificate as under - "The validity of the certificate solely depends on the organization's continued compliance to indicated the standards which is subject to annual surveillance inspection." From the above contents of the certificate it is clear that there were some norms and standards to be followed for the continuation/renewal of certificate. Further, on going through the case records, it is seen that Shri Pravinbhai M. Mangukiya, partner in assessee firm, has seen to be made an affidavit on a....
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....ued on assessee by the SGS India Pvt.Ltd. and same was available with assessee and therefore not provided. Further, despite of warnings vide letters dated 25.07.2006 and 21.03.2007 from the SGS India Pvt. Ltd, assessee has not taken care of the same and has not surrendered certificate which shows that assessee has followed the norms. Therefore, in view of the above discussion, since assessee has not carried out its activities in accordance with the requirements of the NPOP (National Standards For Organic Production) standards, the claim of the assessee made u/s. 80JJA is not tenable nee same is disallowed. 4. For the reasons given above, the claim of the deduction u/s 80JJA made by the assessee is not in accordance with the rules and hence the same is disallowed. The penalty u/s 271(1) (C) is initiated for this misrepresentation of facts by the assessee. 5. Through the submission made in the evening of 29/12/2009, assessee has requested to provide an opportunity before making any addition/disallowance in the total income declared. However, this request of the assessee cannot be entertained due to the time limitation. Even otherwise there are many defects ....